By Abiola PETERS
The Director-General of the Nigeria Employers’ Consultative Association Mr. Wale Oyerinde, has called for a holistic and multi-pronged approach towards resolving the challenges faced by the nation.
Speaking on the state of the economy at an event in Lagos, the Director-General stated that “the nation is currently faced with multiple challenges, with dire combination of spiralling inflation, rising energy cost (aviation fuel, diesel, etc.), scarcity of FOREX, dwindling value of the Naira, an almost comatose Aviation sector, stuttering education system, rising debt, depleting Foreign Reserve and rising fuel subsidy expenses among others, which threatens to lay bare the country’s economy.
Hence, there is no better time for Government to reappraise current economic policies and deepen its engagement with the Organized Private Sector than now. Mr Ayorinde added that while government’s effort to salvage the economy is commendable, there is, however, need for a more holistic approach to resuscitate the stuttering economy.”
Speaking further, the NECA Boss averred that “being dependent on Crude oil for about 90% of its Foreign Exchange earnings and 80% of its budgetary revenues, Nigeria has always lived dangerously on the precipice, with a major chunk of its revenue dependent on the complexities of global Crude demand and supply. A dangerous blend of self-destructive tendencies, insecurity and fiscal and monetary policy inconsistencies have also conspired to make the situation worse. While revenue continue to shrink, the nation continues to dig its feet deeper into debt. At different times over the past few years, various international bodies including the World Bank, International Monetary Fund and the World Trade Organization have warned about the excessive nature of the country’s borrowing. While some Stakeholders have canvassed that the revenue to GDP ratio of the country is healthy, recent announcement by the Minister of Finance, Budget and National Planning that revenue to debt service ratio is in the negative calls for urgent concern”.
According to Mr. Oyerinde, “In April, the World Bank warned that the rising cost of fuel subsidy could significantly impact public finance and pose debt sustainability concerns. Alas, this projection is almost happening. The Fiscal Performance Report released recently by the Federal Government confirmed the accuracy of these projections. The combination of a struggling aviation sector and roads taken over by bandits have also conspired to fuel the situation, leading to rising inflation at 18.6% (according to the NBS). These have continued to worsen the promotion of Commerce and the increase the rate of de-industrialization of some regions of the country.”
Making recommendations on how to deal with the multi-faceted challenges, the NECA Director-General opined that “a deliberate and economic priority influenced approach and wide consultation with Stakeholders should commence, with the view of harvesting alternative policy options to re-energize all sectors of the economy. While the challenges of revenue shortage are acknowledged, burdening businesses with new taxes or levies will be counter-productive and a self-destructive action. Over-burdening already burdened businesses will only lead to business closure and an escalation of job losses with consequential effect on our social and economic stability.
Government should, in the short-term widen the tax net, reduce wastages in governance, and focus on economic projects that will stimulate the Nigerian economy and guarantee an enabling environment for businesses to operate. An enabling environment for local businesses will create the platform for new foreign direct investment, which could increase FOREX inflow into the country.”
Speaking further, Mr Ayorinde averred that “in the medium term, the Federal Government should, as a matter of urgency, fix the four national refineries and encourage the development of Modular ones as a precursor to total removal of fuel subsidy. With over N5trillion budgeted for subsidy payment in 2022, an amount larger than the budget for education and agriculture, this is unrealistic and unsustainable. Economic interventions aimed at improving living standards (to stimulate consumption) and Enterprise sustainability (to promote job creation) should be implemented. While FOREX scarcity persists, allocation of the available FOREX to manufacturing and other productive sectors of the economy should be given priority”, he concluded.